ASIC has penned an open letter to lenders calling on them to help clients experiencing monetary hardship.
The letter was despatched to 30 banks, credit score unions, purchase now pay later companies, and non-bank lenders, together with main banks ANZ, CBA, NAB, and Westpac, as a warning of their obligations to debtors.
“The financial setting has shifted during the last yr, inserting vital monetary stress on on a regular basis Australians,” stated ASIC commissioner Danielle Press (pictured above).
“ASIC reminds lenders that they will need to have the suitable preparations in place to reply to requests for help from clients experiencing monetary hardship and to work constructively with them to discover a sustainable resolution.”
The letter stated the regulator “is conscious of accelerating proof” suggesting that some shopper cohorts are experiencing monetary misery and hardship as a consequence of growing price of residing pressures.
For instance, there was a 28% enhance in calls to the Nationwide Debt Hotline in 2023 in comparison with this time final yr, and ASIC stated surveys point out {that a} rising variety of customers are reporting very excessive ranges of economic stress.
This coincided with a Roy Morgan examine that present 1.5 million Australians at the moment are vulnerable to mortgage stress.
Delinquencies and hardship software volumes are additionally beginning to enhance, though from comparatively low ranges.
The letter stated when seen on this context, it’s critically essential that lenders have acceptable preparations to reply to and help customers experiencing monetary hardship.
Within the letter, ASIC units out expectations of lenders to fulfill their obligations.
These included proactively speaking how and when clients can search help, genuinely contemplating buyer circumstances to develop sustainable options the place attainable and speaking repeatedly with clients all through and on the finish of the help interval.
“ASIC expects all lenders to noticeably think about the expectations outlined in our letter, and to take the required motion to make sure they fulfil their obligations in supporting their clients,” added Press.
In an interview with ABC journalist Peter Ryan, Press indicated the letter was a “shot throughout the bow” for lenders.
“That is actually a warning to banks that they want to make sure that they’re appearing in the suitable approach. What we’ve seen is a few inconsistency inside the banks and I feel that’s what is regarding us round a few of these hardship preparations…” Press stated.
“It must be constant as to who you discuss to at a financial institution and it shouldn’t matter whether or not you ring a department or the pinnacle workplace or the department supervisor, you need to get the identical response.”
Trying forward, ASIC stated monetary hardship will likely be an space of elevated focus over the subsequent 12 months together with knowledge assortment from 30 massive lenders about hardship purposes.
Moreover, ASIC is endeavor a overview of 10 massive residence lenders to know their strategy to monetary hardship. These residence lenders have been amongst the lenders ASIC has written to. ASIC expects to launch findings from this overview in early to mid-2024.